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Economics: Money & Financial institutions - Speech or Presentation Example

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M1 and M2 has been on the increase since 2007, there has been a gradual increase in M1 and M2 and the reason why this is the case is due to increased government spending aimed at helping the economy y to recover from the recession.
Value of share traded refers to the total…
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Economics: Money & Financial institutions
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"Economics: Money & Financial institutions"

Download file to see previous pages (i) Sofia buys 200 shares in Disney Corporation: In this case if these are newly issues shares then this constitute the primary market but if the stocks were previously issued then this constitute the secondary market. The capital market is a security market for long term borrowing while the money market is a market for short term borrowing; in this case therefore the transaction is part of the money market. Finally the transaction constitutes equity given that the company raises capital through issuance of shares.
(ii) James takes a mortgage to buy a house: This transaction constitutes debt, this is due to the fact that James owns the mortgage company, the transaction is part of the capital market given that the repayment period exceeds one year.
There was a slight increase in the second quarter compared to the first quarter of 2008, for the third and fourth quarter there was a relatively higher increase in credit market borrowing compared to the second quarter borrowing. Treasury securities were traded a lot more while agency and GSE backed securities were traded a lot less.
iii. Net worth: in 2008 household net worth declined compared to previous years, there was a continuous decline in the household net worth in the four quarters; the reason why there was a decline is due to the decline in disposable income.
the present value of an asset is the value of an asset today taking into consideration future income that can be generated by the asset, it is an important value in that it helps in comparing debt instruments, it helps identify the most optimal choice and also in determination of investment risks ...Download file to see next pagesRead More
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